Sep 1, 2016 - Story of the Week: US job market - Full time vs. Part time employment

This week we are focusing on the situation in the US job market. The headline total NFP employment numbers are followed by the public but the data should be broken down into full time employment and part time employment. This can give us an interesting insight. There are still some opinions that part time employment being still too high etc. I have put together few interesting charts below to see the real trends and what could be behind the numbers…. Before we continue however, let’s look at the reasons why people could be employed part time...

Part time employment figures include people who are part time employed because they couldn't get a full time job or their working hours have been cut...etc. Despite that, they still want to have a full time job they accept the part time offer  (Part time for Economic reasons). The other group contains those who just need more free time to take care of their kids, want to earn some extra money or just want some time for their hobby … (Part time for Non-Economic reasons).

Now the rest is for those who still have doubts about the health of the US Labor market … let the charts below tell you the rest of the story about the full time and part time employment in the US…

Total employment is increasing steadily since 2011:

… and the Full time employment is keeping the pace:

Part time employment stopped growing in 2013 and since then it stays within the range. However, when you look at the chart closely, the trend turned to the downside: 

The number of those who are part time employed for non-economic reasons or if you like, those who don't want to be full time employed are growing rapidly… (please note here the data is only for the last 10 years):

However, the number of people who are “forced” to work part time, despite they would like to find a full time job, is falling strongly, which is offsetting the increase of the Non-Economic Reasons group… (again chart starting in 2006):

Well, after looking above we should believe the Fed when they say the labour market is in a good shape. However, what the Fed should realize is that without doubt these trends shown on the charts will cause sooner or later an increase in wages and this will generate inflation.

Our message... 

Dear Fed, 

There is no more time to postpone the hike and if you will be too late to do so, you will make the same mistake as Mr Greenspan did few years ago. This will be the beginning of another crisis, but this time much bigger one than the last one.

Sincerely Yours,

Mr TechMan

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